U.S. stock funds gain $11.8 billion on solid economic recovery

Fri Jul 12, 2013 5:24pm EDT

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(Reuters) - Investors regained confidence in stock funds over the latest week and poured $11.8 billion into U.S. equity funds, their biggest weekly inflows since September 2011, data from EPFR Global showed on Friday.

Europe equity funds gained $2 billion, their greatest weekly inflow since May 2012, and all equity funds tracked by EPFR added a net $13.6 billion during the week ended July 10. Japan equity funds took in $689 million to extend their inflow streak to 26 weeks.

The benchmark S&P 500 index rose 2.3 percent over EPFR's reporting period on improved economic data, anticipation of a better-than-expected earnings season and reduced concern about cuts to the Federal Reserve's massive monetary stimulus.

"I think the data shows some faith in the U.S. recovery and an easing of the angst caused by the Fed's fairly definitive statements about wanting to taper QE3," said Cameron Brandt, director of research for EPFR Global in Cambridge, Massachusetts.

"The U.S. in many ways is the best-looking economic story among a lot of not really great ones at the moment."

Fixed-income fared less well in the latest week, with investors redeeming $2.69 billion from all bond funds tracked by EPFR. Investors yanked just over $1 billion of that total from municipal bond funds, which have seen outflows for seven straight weeks and had more than $11 billion redeemed since the beginning of June.

High-yield bond funds, on the other hand, gained $760 million for their second straight week of inflows.

Bonds prices fell over the last week as the yield on the benchmark 10-year Treasury climbed 17.1 basis points to 2.674, at one point reaching as high as 2.7550.

Investors remained wary of the prospects for emerging markets, though the MSCI emerging stocks index edged up 0.4 percent during EPFR's reporting period. Combined outflows from emerging markets equity and bond funds surpassed $3 billion for the fifth time in the past six weeks.

Money market funds gained $34.5 billion, a 27-week high, with more than two-thirds of that total going into U.S. money market funds.

Gold funds suffered outflows of $1.4 billion for the tenth time in the past 15 weeks. Commodities sector funds had redemptions of $1.7 billion after notching their biggest quarterly outflow on record for the second quarter of 2013.

EPFR Global tracks over 49,000 mutual funds worldwide that include ETFs and alternative funds and make up $20.5 trillion in assets under management.

(Reporting by Alison Griswold; Editing by Bernard Orr)

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